Rovio’s $42M Series A Sticks Out Like A Sore Finch

When Rovio Mobile Ltd. first released a modest mobile game featuring ticked-off birds and cute pigs, a blockbuster financing round seemed as likely as homicidal avians hurling themselves through the air via slingshot. But the company set itself apart with its addictive Angry Birds game, which caught the attention of millions of users seemingly overnight.

Associated Press

Now it has set itself apart with a Series A round that stands out from the crowd due to its sheer size.

The most recent parallel to Rovio’s $42 million first round — co-led by Accel Partners and Atomico Ventures – is Playdom Inc., a social gaming company that raised a $43 million Series A round in November 2009, and followed it up with a $33 million extension seven months later. Of course, that financing, which included New Enterprise Associates, Lightspeed Venture Partners, Norwest Venture Partners, Bessemer Venture Partners, Steamboat Ventures and New World Ventures, worked out just fine when Playdom was acquired by Walt Disney Co. for up to $763 million including milestones.

In 2008, Big Fish Games Inc. reeled in an ever bigger first round, $83.3 million from firms including Balderton Capital and General Catalyst Partners.

But such first rounds are rare, especially at a time when tech start-ups are able to get off the ground and gain traction with users with far less in funding than they used to. The median size of a first round in the U.S. last year was $3 million, the continuation of a steady downward trend over the last several years, according to VentureSource, an industry tracker owned by Dow Jones & Co.

Within the consumer services sector, the picture was the same, with a $3 million median figure for U.S. first rounds in 2010. That was up slightly over 2009 but was still one of the lowest figures of the decade.

Finland-based Rovio dwarfs its European brethren too. The median first round last year in Europe was $1.8 million, about on par historically for the region.

“It’s not a small round,” said Accel Partner Rich Wong. “It’s a gigantic space and it’s exploding every day.”

Wong said Rovio will use the cash to expand internationally (the company now employs 50), build fresh franchises on new social and mobile platforms, ramp marketing and solidify advertising. He didn’t say whether the funds would be used to acquire other start-ups –- a strategy Playdom pursued after raising its $43 million round — but indicated it was always a possibility.

“You want to have enough gun powder to invest in these things when the opportunity is big,” he said.

With the rise of smartphones and a free-to-play model that can attract lots of users quickly — along with the blockbuster social-gaming exits for Playdom and competitor Playfish Inc., which sold to Electronic Arts Inc. for about $300 million in November 2009 — mobile games seem uniquely positioned to continue bucking the trend of smaller first rounds.

Just last month, TinyCo, which made the popular mobile game titles “Tap Resort Party” and “Tiny Chef,” raised an $18 million Series A round from Andreessen Horowitz and angels. At the time, co-founder Ian Spivey said, “In the next two to three years there’s going to be a billion-dollar company in this space. We want to be that company.”

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